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On this episode of Three Key Insights.
It's important to remember that it's lonely at the top.
The way you process information, the way that information can be influenced is not the same
as when you were working in a mid-level or an entry-level position.
The auto industry is moving fast, and it's getting more complex.
Success Today takes more than instinct, it takes insight.
Welcome to Three Key Insights with Sanjeev Yashnik, president of Capital One Auto.
Today, Sanjeev welcomes Natasha Del Barrio, CEO of the Bert Ogden Auto Group and one of the industry's
leading executives. Having risen from a high school intern to leading a massive 25 rooftop network,
her experience fuels a unique point of view about the realities of scaling up,
building a corporate team, and standardizing operations for group success.
Now, one of the fascinating things, Natasha, that I know about you is that you started actually
during high school as a part-time marketing assistant at the Bert Ogden Auto Group.
And after finishing college, you worked at Citigroup and JPMorgan before coming back to the
dealership and then rising very fast to finally becoming the CEO of the group.
And you were named CEO in 2017, and you always see all the dealerships. Natasha,
how can you talk a little bit about what you learned during your internship days and then
coming into the business and your ascent to becoming a CEO?
Well, you know, what I learned during those early days is kind of a funny story.
I was hired to be the marketing assistant, but I was 15 years old. And so the marketing director
thought, what in the world am I going to do with this kid? And so she sent me off to every other
department in the dealership to do administrative work for any other department that had anything to
do. So before I touched my first piece of marketing paper, I had done a little bit of something in
every department of the dealership. So that's how it started, floating around from department to
department until we found a marketing task that the marketing director finally gave me and it went
well. And I worked probably 10 hours a week because I was still in high school and I had an epiphany
a little bit later that I was spending more money and gas than I was making because, I mean,
we won't say how long ago that was, but the minimum wage was 525 an hour at the time.
And so after finishing school, you went to work with Citigroup and then JP Morgan
still in the, you know, connected to dealers. So you were managing a portfolio of over 140
dealers before coming back into a dealership. What did you learn in the banking sector
that you could bring back to the dealerships? I think spending time in the banking sector
equipped me very well for this position. I got to understand very intimately what the other side
of the transaction looked like, whether you're talking about a floor plan transaction or retail
installment transaction. But I think you can be a lot more effective at what you're trying to do
when you have a clear understanding of what the other side is doing.
Yeah, there are not many people who have a good understanding on both sides. Now, one of the
things that really drives us is the fact that the dealership business is such an important
business in the United States. I mean, apart from the fact that it is one of the most entrepreneurial
businesses in the US, it also serves an incredibly important purpose of providing personal mobility,
which actually for many families leads to financial mobility and also emotional well-being.
And it is a tough business to actually run. But to get into the business, to run it and to be
successful is incredibly difficult. Now, one of the things that we are seeing across the board is
that it is hard to be a dealership with only one rooftop because there are economies of scale,
etc. But scaling out a dealership into many rooftops brings along with it many, many challenges.
And there are some of these challenges that you've really got your arms around and you've been very
successful. So can we pivot to that? I'd love to know from your perspective,
how do you think about the rolling up of rooftops? What is the process? What are the issues that are
faced? And how does one drive success when you have to do that? So let's just start with,
do we need many rooftops to succeed in today's environment and why?
I think it's very beneficial to have more than one rooftop that is definitely a challenging
position to be in as the economy ebbs and flows. Some of our, say, luxury brands are doing very
well when the domestics aren't or vice versa. And so it just diversifies our portfolio, so to speak,
and enables us to withstand the highs and lows a little bit better. Certainly, along with the
additional rooftops, we are better able to leverage economies of scale. We can negotiate much better
positions, which all leads to improvement for the bottom line. So is it necessary? Maybe not. Is it
helpful? Absolutely. There does come a point where too many can be too many if you don't have the right
team around you and the right structure in place. And in terms of scaling, but also rolling up into
a corporate entity, our dealer group grew a few through open points, but many through buy sale
transactions. And when you go through that buy sale transaction, that dealership has established
processes and procedures and employee habits that currently exist. And so by the time I became the
CEO in 2017, it was very difficult to manage administratively because apples were not apples
in two different stores, right? The processes were so different, so the inputs were different,
therefore the outputs were different. And to really be able to efficiently manage something of this
size, you've got to be able to do that globally and have unified, coherent data. So that's where the
decision came from, that we had to get everybody doing things consistently the same way. And it
was tough. The first five years of it were extremely tough. I think change is difficult
for everyone, even if they know that it's good change. And it was all the way down to things
like mapping within the DMS all had to be reconstructed because one store had it set up one way under
its buy sale and another store had it set up another way. I'm just going to take one piece at a time
because there's a lot that you've said there. And I'm sure that we'd like to dive into a couple of
different pieces of it. So let me just stay first on the number of dealerships and the advantages.
You said there are two major advantages. One is the fact that some brands will do well in certain
time periods. Others may do well in other time periods. And then you talked about economies of
scale. Can we unpack that a little bit? And then you said one third thing, which is one may not be
enough, but too many, maybe too many. So let's just start with, is it possible for a single
rooftop to compete effectively in today's environment with a dealership that has multiple
rooftops? I think a dealership that is high volume, high gross and run perfectly can definitely
compete as a single point. That's not typically the case with most single points. So I would say
that it's very, very challenging. And is it getting more challenging today than previously because of
the way the business is is is morphing and changing with customers getting more and more
information in their hands? Or is it pretty much the same of the last 10 years? No, I think it's
definitely getting more challenging. And especially if you've got one stored, gross compression is real.
Would you recommend if someone is getting into dealerships and they're one rooftop,
from what I'm taking away from you, you would recommend first running it really well, but
thinking about additional rooftops so that you can get economies of scale. And the other thing is
you can get economies of scope, which is different brands which may do well in different time periods,
would be advantages. That's the key is if you're going to scale, sometimes we think, well, it's easier
if I know this one line, so I'm going to go after more of these. And that's great in good times for
that line. It's not so great when it's tough times for that line. So as you're growing and scaling,
I definitely recommend some diversity amongst the brands. Okay, so that is a really good thing to know.
So for the general advice is multiple rooftops, but it comes along with its challenges.
Absolutely. Now, there's a challenge of putting everything together in the right way, and we will
come there. But are there any other reasons why you would say there is a sweet spot of the number of
rooftops you want to get to or their breakpoints? Because you said you need to have a few, but
too many, maybe too many. Do you have perspectives on that?
That's really relative, depending on what your talent pool looks like. So another benefit of
the multiple rooftops is that we've got a larger talent pool, and now that we have brought everything
into have a corporate structure, it's very easy to move people from one store to another when the
need arises. But what your talent pool and what your support system from a human capital perspective
looks like is going to have everything to do with how many is too many. So the more you grow, the
more support you need, there's no way I could do this with these 25 rooftops and 27 actual stores
by myself. I mean, I would love to say that I'm Wonder Woman, but there's just no way I could get it
done. But we get it done because we've got a really amazing corporate staff that can support all of
the dealerships. It was chaos before that. So how would you say, for instance, you were brought in
and only recently, we've put together 10 to 15 to 20 rooftops. What would be your first action
as you step into a CEO role running that? Well, as I mentioned before, my first action was bringing
everything into a corporate structure. So we really understood what we had when we were looking at
reporting. And that's easiest to do in the frontline positions of the dealership. It's harder to
start an accounting where you've got so much DMS mapping and tax issues. But we took the very
process driven parts of the dealership, such as the service department and the sales department,
and we brought our team together in a think tank, so to speak, and said, what is the best, most
effective, most consistent process? And we brought all of the best practices together. We wrote up
one process that became the Burdogdon process. And then we had a team, it wasn't just here's the
document, now you've got to do it, but we had a team who was responsible for rolling it out and
implementing it in the stores so that we could start changing that pattern of behavior to come
into alignment with whatever that new process was that we wrote. So then once we got through those
more tactical and transactional positions and setting things up consistently store to store
to store from there, one of the next things that we looked at was compensation. We had a huge issue
with people talking about compensation from one store to the next. And that is always unfavorable
for someone if it's not consistent all the way across the board. It also made it a lot harder
for us to transition employees if we had the need to do that. So we were able to bring
all the compensation into alignment. And certainly there's a few different markers depending on the
type of store, right? There are nuances about our luxury lines that are different than our
import lines, our domestic lines. So the carrots might hang in slightly different places, but the
overall skeleton of the plans are the same. You can walk into any store and know what people
are responsible for doing as per their pay plan. Now, how did you choose your corporate staff?
So you said we put a team together to roll it out and so on. Was the first step assembling a
staff that works around you and then stepping into some of these change processes or did you
start with the change processes and then pull out people to bring in centrally?
Definitely the latter. I did not get a solid core group of people around me until probably the last
several years. This was more a matter of setting change in motion for a particular process that
needed to be changed, figuring out who the best champion was for that process, and then giving
them the authority and autonomy to affect change across the group. And those people who went out
and did that and did it from a company-minded perspective, looking out for the best interest of
the consumer, the company, and our stakeholders, those are the ones that ended up just sort of
naturally becoming part of the corporate staff and transitioning over here. So it kind of built
itself from the bottom up until we actually had a hierarchy of an actual corporate office and
corporate team members. And selecting those individuals is easy once you've given them
a task and seen how well they take ownership of that and how effective they are in driving change
and growth and education amongst the team members. But one thing, I don't always look for the person
who's the most experienced or the person who's got the most knowledge. I believe that many of those
skills we can teach people, but there are certain intangibles that I cannot teach you.
you to be moral. I cannot teach you to have good work ethic. I cannot teach you to have a positive
attitude or to be kind. You're either those things because you choose to be or because you don't choose
to be. So we very much look at the soft skills because we're not a do it because I said so group.
It's really here. This is the vision. This is what we're doing. We want to share it with everyone.
We want everyone to understand why we're doing this. And it takes a certain type of individual
that can connect well with people in order to do that. We have a company motto, which is do the
right thing every time, all the time. So certainly we need leaders that are living up to that motto.
That's a brilliant move actually because if you make the mistake of starting with the corporate
staff and just bringing in people, if they're the wrong people, then you're just going to be
trying to roll out things ineffectively. And you wouldn't know whether it is because
the thing that is being rolled out is ineffective or the people are ineffective. But this way,
you can see the winners and the people who want to do the right thing. And I love your point about
orientation versus knowledge. So people who have the right attitude
is so much more important than people who know things by rote.
Well, and we've got over 1200 employees. And so there's no way that we are going to be able to
move his ship unless we have buy-in. So by selecting the corporate staff by people who've taken on
group-wide projects for us has really created the confidence amongst the team and the buy-in
amongst the team once they get into those corporate positions because they remember when
we had this struggle and you came over here and worked through this and helped us through this.
So then once they transition to that corporate position, they've got the respect and the
confidence of the team that they're trying to lead. You talked about going after the processes
first and whether it is sales or service department and so on. And you said accounting,
etc. is a little harder because you have different DMS systems, different strategies,
different ways in which data is served up, etc. But what do you do about that area? Do you just
leave it alone? Do you have some common processes? Do you tackle that as the next stage?
I think that's absolutely critical. You definitely have to tackle that. It's possibly more important
than everything else, but everything else feeds that and quite frankly is easier to change than
the accounting department is. And so we had to make decisions. Every OEM has their own dealer
accounting manual preference on DMSs, etc., etc. So we had to make a decision. This is what our
group is going to do. This is the DMS we're going to use. This is the chart of accounts that we are
going to ascribe to throughout the dealerships regardless of what the brand is. And it took
probably 12 to 15 months of tedious, tedious mapping and checking to make sure everything was
happening the same in every single dealership. But even in the accounting department, you just,
how do you eat the elephant? Right? One bite at a time. So we just took one project, one department
at a time and worked on it. Is there a particular department in the dealership? Now I'm just talking
about, say you're trying to get all your processes right. You're working with the accounting piece.
You're working with the plans on DMS and so on. On an ongoing basis, is there a particular area of
the dealership where you would say you have to, when everything is working and it's been a few years,
where you actually have to pay a lot of attention to or more attention to than others
to make sure that everything is running really well? I think that would definitely be the sales
and finance department. When we're dealing with a customer and the sales and finance department,
there's constant give and take of information required to get to the end of the transaction.
And while the majority of customers are absolutely wonderful and absolutely amazing,
you've got some fraudsters and people out there that will try to take advantage of a situation.
And so that's definitely where I feel we have to be the most vigilant because that's where we've got
the most exposure. One thing that we did in order to make sure we were protecting ourselves from that
is we established an internal audit department. And while individuals in that department have
the capacity to audit our accounting department, which is I think what people think of generally
when they think of auditing, what these individuals are primarily tasked with is going through all
of the transactions. And so I can't remember, I haven't seen it lately, but the last time I looked,
they had a 157-point checklist that they were looking at and they're looking at state and
federal regulatory issues. They are looking at particular OEM expectations. They are matching
up contracts to callbacks and making sure everything is accurate, which should pretty much be handled
in the funding process, but you'd be surprised if we catch some things here or there. And then
certainly they're looking for any type of fraud or misgiving and making sure that we're aware of it
before anyone else. So it's a laborious process. There are, I believe, eight individuals that we
have tasked with that job, auditing every single one of our deals throughout the organization.
But I tell you what, at the same time, I don't remember the last time we've had to terminate
someone for fraudulent information. If I can pivot to one last area, which is
you've gone through this entire process, you've been incredibly successful. But if you wished you
had known as you took on the CEO role something that you know now, if you wish you had known then
that you know now, what are the few lessons that you've derived from all of this that you would
definitely leverage if you had to do it all over again? Oh my goodness. These questions and
conversations that end in an absolute answer are always so challenging for me because it's so complex.
There's so many things. But I think it is important to remember, and this is going to sound very
negative, and I don't mean for it to be, but it's important to remember that it's lonely at the top.
The way you process information, the way that information can be influenced is not the same
as when you were working in a mid-level or an entry-level position. And the amount of
responsibility that you take with you every day, it's not a burden. It's definitely a responsibility,
but I think people underestimate how intense that can be. I think that it's a wonderful learning
and experience. And so what I'm going to try to do, Natasha, we can continue to speak for hours on
this topic, but you've given some really great lessons that you've learned and things that a lot of
people can take away. So what I'm going to try to do is just summarize what my three big insights are
from our conversation. One is for dealers who want to be successful, the time has come for us to think
about scale in a different way, because in the yester years where you had low volume,
high margin businesses, grosses are being compressed, and we need volume in the stores,
so it is more difficult to run a one rooftop kind of a dealership unless it's very high volume and
everything is done perfectly. Your perspective is, look, you need to have more than one rooftop for
a variety of reasons. You get economies of scale and economies of scope. The economies of scope being
if you run different brands of rooftops, you can then weather many storms versus having
just one kind of a line which may be good in good times, but may become really bad in bad times.
So that's like an economies of scope. You've got scale of people and being able to move talent
around. You've got expenses that you can do administration at one place and make it really
easy and lean to run your rooftops. Many rooftops is better than one, and so that's
that's insight number one. Insight number two is it's not easy. Just saying many rooftops,
it's a very difficult journey to try to get everything to work together, and you have to
try to get everything to work together. And so many of your learnings is instead of starting with
the accounting section and the DMSs, etc., which is much more difficult, one should start with the
sales service department because they are process driven and they're faster to get to one process.
So one can really focus on that. It's very important to find the team to roll it out and to go through
the change management. So it's not just telling people to do it and they'll do it. Building the
similar compensation right across the organization gets the talent settled out, making sure that you
have a corporate staff to do this, but instead of trying to recruit them and starting with the
corporate staff, starting with the process rollouts, identifying people importantly who have the right
attitude versus just the knowledge is incredibly important, and then finding them, surfacing them,
bringing them into the center and using them as the core to continue to build out the dealerships
is incredibly important. And then finally, it's not like accounting and the DMS, etc., is not important.
It's incredibly important, but that is the longer pull in the tent and to be really plan full about
that and doing it over a longer period of time in a systematic way is incredibly important. It's one
of the most difficult pieces to do, but it has to get done. And so potentially by building a good
corporate staff, by having credibility, by doing some of these other things, by getting those wins,
you have the credibility to take the other pieces and make that work. And I love your
discussion about an internal audit team, which is actually not only going through some process,
but going through every transaction, because trying to understand how the transactions work and being
able to find some commonality and then doing best practices through that, because sales and finance
are the areas that have the most churn and the most change, and it requires constant attention.
You've got issues of fraud and trying to protect against fraud, which can wipe out dealerships.
And then the third insight for people and leaders who want to go into this business and build out
many dealerships is that it is lonely at the top. And I think that's a message not only to the principles,
but also to the folks in the dealership. So for the principles, it's not going to be easy.
And it's not like you're going to have, you have to have the right orientation.
So you're doing it for the right reason, because your responsibility is huge. You've got a lot of
people whose livelihoods are going to be based on the decisions that you make. And so you've got to
make the right decisions. You've got to surround yourself with the right people. But remember,
it is a lonely journey. For people in the dealership, I guess my extrapolation from what you said is,
this is a great opportunity, because if you know that the leader is going to have a lonely journey,
be part of the solution and don't be part of the problem. And if you are part of the solution,
if you lean in, if you have the right attitude, your stars are going to rise with the leader,
because they are looking for people who want to help them.
Sanjeev, you deserve the most props because I didn't see you take a single note, and I don't
think I could have recapped my own comments as well as you just did. That's absolutely correct.
But this is amazing, Natasha. I just want to underline, you're an amazing leader. You have
blazed a trail here, and you've done so much, so right. I want to congratulate you, and thank you
for spending the time with us and giving us your wisdom, because I'm sure there's a lot of people
who are going to gain a lot from your practical knowledge of how you actually took something,
you turned around, you made it very successful. Congratulations, and I look forward to seeing
you soon in the field. Yes, sir. We'll see you soon. Okay, you take care. And my best to the family.
Yes, bye-bye. Bye. The dealers who win turn insights into action. Now's the time to take the lead.
This has been Three Key Insights with Sanjeev Yajnik. We'll see you next time.
The views and opinions expressed by guests on this podcast are solely their own, and do not
necessarily reflect the official policy or position of Capital One Auto, Capital One NA, or its affiliates.
This content is provided for informational and educational purposes only, and is not intended
to serve as financial, legal, tax, or business advice. Viewers should consult their own independent
professionals regarding their specific individual or business needs.
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